Claims Complexity Meets Digital Simplicity as Insurers Push for Instant Payments

The digital transformation of the insurance industry is a work in progress.

Digitizing trillions of dollars in payments bumps up against the complexities of the claims processes, and the tangled web of interactions between carriers, policyholders, regulators and a host of multiple payees.

eCommerce has set a high bar for all manner of industries, and insurance is no exception.

“If we can make an iPhone or an Android phone buzz with a deposit, satisfying a claim while the policyholder is still on the line with the adjuster, or still texting back and forth with the adjuster, we can create a much more satisfying solution and one where the promise of insurance is actually realized,” One Inc. CEO Ian Drysdale told PYMNTS in an interview.

The efforts are titanic in scope. Drysdale said insurers must navigate 50 different regulators in 50 different states. The ways in which surcharges or convenience fees, premiums and other financial interactions are calculated and conducted vary from market to market. A key example lies with auto insurance, where 28% of claims are related to “totaled” status, seeking to recoup the total value of the car.

Insurers must find out how much is due on the auto loan, who holds that loan and where to pay off that loan.

“Then you’ve got to track down who’s got the title,” Drysdale said, and move the title from the lien holder to the bank — and work with the salvage company to see how much the totaled car might sell for, say, overseas. Eventually, the claims are paid out.

Overall, with specialized claims, such as workers comp, Drysdale said, “when you layer the complexity of electronic payments on top of that, and you’re talking about thousands and thousands of permutations and combinations,” small- to and medium-sized insurers don’t have the resources to tackle it all. Paper checks are still a big slice of payouts at about half of disbursements.

“Insurers know they have to move forward to be relevant” in the digital age, he said. Insurance executives use banking apps, Amazon and Netflix every day in their personal lives, and they recognize the value and ease of streamlined digital interactions.

“It all requires multiple movements of money and multiple movements of data,” he said. “It requires multiple sign-offs.”

Moving Into the Digital Age

One Inc., which seeks to digitize the insurance industry and connect those stakeholders and payments, counts 11 of the top 15 insurers in the United States among its clientele (up from 10 a few months ago). Moving to digital channels helps deliver the promise of insurance, Drysdale said. If something goes wrong, there’s an affordable solution to the problem that would otherwise be financially painful or even impossible (such as, say, replacing a car or dealing with home repairs after a catastrophe).

“That’s the moment of truth,” he said, and insurers that do not meet expectations during the claims process lose policyholders (and revenues).

Delving back into the claims process with autos, when one of the company’s 900,000 vendors or suppliers needs to be paid, the carrier sends a payment to One Inc., which then disburses the money electronically.

In terms of the digital transformation, One Inc. can take a top-tier insurer from 15% of its payments done digitally to 75% in a single day, Drysdale said.

Over the long term, the company will look to expand in worker’s compensation, automating revenue cycle management and back-office reconciliation. An injured worker can pick PayPal, Venmo or Mastercard Send for their money, and they will be “paid correctly on time and digitally within the rules of that state,” Drysdale said.

“We are leveraging the value of real-time payments and push to debit, so the people can be paid 24/7/365 via their favorite wallet type,” he said. “…We’re seeing that modern, forward-thinking insurers desire a world in which the claimants, the vendors and the suppliers are paid instantly … and the demand for that is out of sight.”